The Centre has decided to provide full interest subsidy on education loans taken by students belonging to the economically weaker sections for pursuing technical and professional courses. The interest subsidy, during the period of moratorium, will be available to those students with parental income limit of Rs 4.5 lakh a year. The scheme for interest subsidy was approved by the Cabinet Committee on Economic Affairs (CCEA) at a meeting.

 

Moratorium period

The moratorium period refers to the course period, plus one year or six months after the student gets a job. Under the scheme, the interest payable (for the moratorium period) by the student availing the educational loan scheme of the Indian Banks’ Association will be borne by the Government, the Union Home Minister, Mr P. Chidambaram, told reporters after the meeting. Once the moratorium period is over, the interest on the outstanding loan would have to be paid by the student borrower according to its provisions.

Mr Chidambaram said that the interest subsidy scheme would benefit over five lakh students in pursuing higher education in technical and professional streams. The number of education loans was 16 lakh as on 31 March and the outstanding amount was Rs 24,000 crore.